Singapore Temasek may sell stake in Indonesia’s BII
Company could be eyeing new opportunities elsewhere: analyst
(SINGAPORE/JAKARTA) Singapore investment company Temasek Holdings said yesterday it may sell its stake in Bank Internasional Indonesia (BII), Indonesia’s sixth-biggest lender.
The sale is intended to comply with the Indonesian central bank’s single presence policy, which takes effect by the end of 2010 and is designed to promote consolidation among the country’s 130 banks.
Temasek’s unit Fullerton owns a 75 per cent stake in Sorak Financial, which in turn owns a controlling 55.78 per cent stake in BII. This effectively values Temasek’s stake at around US$700 million based on current share price.
Analysts had long expected that Temasek, which faces problems over its telecoms holdings in Indonesia, would look at a merger of its Indonesian banking interests. Temasek also controls Indonesia’s fifth-largest lender, PT Bank Danamon.
‘We have evaluated our options under the single presence policy in Indonesian banking and are exploring the sale of our investment in Bank Internasional Indonesia,’ Myrna Thomas, managing director for corporate affairs at Temasek, said in an emailed statement.
‘Our final decision will be based on what optimises value for our shareholders. We remain optimistic about the prospects of the Indonesian financial services sector,’ the statement said.
BII said in a separate statement that Fullerton Financial Holdings is expected to complete the sale before December 2010.
Bank Danamon also issued a statement yesterday in which it said that Fullerton had decided not to pursue a merger option between BII and Danamon.
Danamon shares ended 0.71 per cent lower yesterday at 6,950 rupiah (S$1.06), while BII’s shares jumped more than 3 per cent on reports of a divestment. The Indonesia Stock Exchange index finished 0.39 per cent higher.
‘The bigger picture appears to be that Temasek is shuffling its portfolio to take advantage of the opportunities created by the sub-prime crisis,’ said Simon Tay, an analyst at the Singapore Institute of International Affairs.
‘Why would Temasek want to expose itself to immature and geo-politically-riskier emerging markets if there are opportunities in mature and stable markets in Europe and America?’ he added.
The Wall Street Journal reported yesterday that potential bidders for Temasek’s stake include cash-rich Chinese banks, adding that Industrial and Commercial Bank of China, China’s biggest bank, had purchased a 90 per cent stake in Indonesia’s PT Bank Halim in December 2006.
ICBC declined to comment.
Temasek, which invested heavily in Indonesia after the Asian financial crisis in 1997/98, has encountered a nationalist backlash in the region.
In recent months, Temasek has diverted its attention toward Western banks, which were looking for lifelines to shore up their capital after losing billions from the US sub-prime mortgage crisis. — Reuters
Source : Straits Times - 26 Feb 2008
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